Expert: The CCP’s “common prosperity” has become “common poverty” | Xi Jinping | The Epoch Times

[Epoch Times, October 4, 2022](The Epoch Times reporter Zhang Ting comprehensive report) After the 20th National Congress, whether the CCP will change the key economic policies that affect people’s lives has attracted much attention. Experts say,Xi Jinping“Promoted by cracking down on big tech companies and the real estate industry, etc.”Common prosperity”, terrifying businesses, leading to layoffs and hiring freezes that, instead of meeting the wealth target, make everyone poorer.

Former investment banker and Bloomberg Asia market columnist Shuli Ren said in an article on October 3 that the CCP hasCommon prosperity“The push became”common poverty”。

“Common prosperity” isXi JinpingA signature program championed last year. An insider in the CCP system told the South China Morning Post that the policy will get a new boost at the 20th National Congress. Han Baojiang, director of the teaching and research department of the economics department at the Party School of the Communist Party of China, told the newspaper that the Chinese government will provide a clearer and more detailed roadmap at the 20th National Congress on October 16.

Ren Shuli said Xi Jinping’s push for “common prosperity” aims to expand China’s middle class to include people without college degrees, small business owners, migrant workers and farmers. China’s year-long crackdown on big tech and real estate wiped out trillions of dollars in wealth. While this may have indeed narrowed the Gini coefficient, which measures inequality, these policy measures have fallen short of Xi’s ultimate goal of expanding China’s middle class.

On the contrary, Ren Shuli said that in the past year, everyone has become poorer. So far, the Chinese government has remained silent on this unanticipated impact.

She added that the CCP’s crackdown on the big tech and real estate industries, while aimed at boosting shared prosperity, has spooked companies and investors.

China’s crackdown on tech companies leads to massive layoffs

Xi Jinping himself has mentioned “the need to prevent the disorderly expansion and uncontrolled growth of capital”. In November 2020, the Chinese government began a campaign to curb Internet giants, starting with the cancellation of Ant Group’s blockbuster IPO. In the 18 months that followed, the Chinese government continued to clamp down on industries ranging from technology and finance to gaming, entertainment and private education. Companies such as Alibaba, Tencent and Didi have come under scrutiny and fines, sending their stock prices tumbling.

After dismal quarterly earnings, the battered tech giants said they would embrace a new normal of slower growth and look for ways to reduce operating costs, leading to mass layoffs.

The CCP’s crackdown on edtech companies has also forced them to either shut down or drastically scale back their operations. Last year, New Oriental Education, China’s largest private tutoring company, laid off 60,000 employees as Beijing launched an industry shake-up, the Wall Street Journal said.

Pictured is the headquarters of Chinese internet giant Alibaba in Hangzhou, Zhejiang. (Wang Zhao/AFP/Getty Images)

These unfavorable factors, combined with the severe impact of the CCP’s “zero policy” on enterprises, have made it more difficult for college graduates this year to find jobs. The youth unemployment rate hit a record high of 19.9% ​​in July and 18.7% in August.

Ren Shuli said Xi wants to bring 170 million migrant workers into the middle class. About a quarter are employed in service industries such as retail, transportation and restaurants. Many are “gig economy” workers, preferring ride-hailing and food-delivery jobs to low-end manufacturing.

But Beijing’s massive crackdown on tech companies has disrupted the company’s stable revenue stream. For example, Didi was banned from registering new users during the investigation by Chinese regulators, and several of the company’s mobile apps were removed from its online store. These restrictions have affected the company’s profitability and created a lot of uncertainty for the company.

Ren Shuli said that, as governments around the world have discovered, closing the gap between the rich and the poor is an impossible task. One reason is the mechanism of “trickle-down economics”. When billionaires and big corporations are spooked, their first instinct is to lay off workers and freeze hiring.

Crackdown on real estate industry sparks crisis as buyer’s property depreciates

The “Three Red Lines” policy introduced by the CCP, which aims to limit the amount of borrowing by real estate companies and shrink the property bubble, has hurt the ability of developers such as China Evergrande Group to sell assets to pay down debts. As a result, the pain of the crackdown on real estate spread from private developers to state-owned developers as well as investors and local governments, with companies such as Evergrande defaulting on their debts. Calls for easing policies can be heard in many corners of Chinese society.

The housing market is in crisis, with sales plummeting and house prices falling for 12 straight months. About 70% of household wealth in China is tied to real estate. Bloomberg said Chinese homebuyers are now watching their household wealth drain as the housing market continues to slump, as falling house prices make buyers’ properties now worth less than they agreed to pay, leaving them Struggling to pay your mortgage. In addition, the delay in completion of the apartment building has also annoyed buyers.

Ren Shuli said, “The CCP’s (China) push for ‘common prosperity’ has evolved into ‘common prosperity’ to some extent.common poverty‘. No one is happy now. “

Responsible editor: Lin Yan#

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